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TMI Blog2015 (3) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomers of BSNL, details of which are set out hereinafter. 2. The present Petition is filed by BSNL under Sections 14 and 15 of the Arbitration and Conciliation Act,1996 ("the Act") . 3. The facts which have led to the filing of the present Petition are as under: 3.1 On 9th November, 2004, BSNL entered into an Agreement with PIPL where under PIPL agreed to provide SMS based Value Added Service to Cellular Mobile Subscribers of BSNL. This Agreement was nonexclusive and on revenue sharing basis. The said Agreement dated 9th November 2004 was renewed from time to time, i.e. on 2nd December 2005, 4th December 2006, 6th November 2007, 6th November 2008, 13th January 2009 and 23rd April 2010. Clause 11 of the Agreement dated 9th November 2004 provided that the disputes between the Parties shall be resolved by arbitration through a sole arbitrator appointed by the Chief Managing Director of BSNL. 3.2 Another Agreement dated 23rd November 2004 was also executed by and between BSNL and PIPL whereunder PIPL agreed to provide MMS/GPRS based value added services to the subscribers of BSNL. The Agreement dated 23rd November 2004 was renewed from time to time by renewal letters dated 24th N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Thousand Three Hundred and Eight) calculated @ 18% p.a. till 31st March 2012 in accordance with MSMED Act. We request that further interest be allowed till actual payment and realization of the amount. 3.7 In paragraph 4 (c) and Paragraph 6 of the said Application, PIPL stated as follows: "4 (c): In April 2009 in order to get the things resolved, we issued a notice, through our Advocate to BSNL, to invoke Arbitration ("Notice"). The notice was not replied for a very long time, it is only when the time for renewing the Agreements arrived the BSNL Officials communicated that if we intend to renew the Agreements we will have to withdraw the Notice and the outstanding amounts would be cleared simultaneously. In the interest of long term relationship and with the assurance given by BSNL for clearing our dues, we withdrew the said notice vide our Advocates letter dated 10th February 2010. However, the payments have still not cleared......" "6. Arbitrator and Conciliator: In the present connection, if we once again initiate the Arbitration proceedings with BSNL, we apprehend and doubt the transparency and fairness with which BSNL would handle the dispute and we believe that a fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said affidavit BSNL reiterated its stand as recorded in its Advocates letter dated 22nd January 2013 and further recorded that in the Meeting held on 3rd November 2012, BSNL had categorically submitted that they are not submitting to the jurisdiction of the Council and therefore the conciliation proceedings stood terminated. However the Council had not recorded the said submission made on behalf of BSNL in the Minutes of the Meeting held on 3rd November 2012. 3.12 In June 2013, PIPL filed an Application before the Council under Section 18(3) of the MSMED Act, inter alia recording that the conciliation proceedings between the Parties have failed and praying that the dispute now be referred to arbitration. Paragraph 8 of the said Application is reproduced hereunder: "8. The Petitioner submits that with reference to Clause No. 11 of the Agreements, as has been referred to by the Respondent, the same does not supersede the provisions of the Medium Enterprises Development Act, 2006 and the Hon'ble Council has jurisdiction to adjudge the current dispute and the provision of Medium Enterprises Development Act, 2006 shall prevail. Further the Petitioner has an apprehension th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction to proceed with the hearing of the disputes, submitted a copy of the judgment passed by this Court in the case of M/s. Faridabad Meta Udyog Pvt. Ltd. vs. Mr. Anurag Deepak, Sole Arbitrator. Thereupon the Council fixed the matter for further hearing on 1st February, 2014. 3.15 On 1st February 2014, both the Parties appeared before the Council and made submissions on the issue of jurisdiction, before it. 3.16 According to BSNL, the Council by its letter/notice dated 14th February 2014, informed BSNL that the next hearing before the Council is fixed on 15th February 2014. In the said letter/notice it was stated that the Minutes of the Meeting held on 1st February 2014, were enclosed therewith. Since no such Minutes were enclosed, the Advocate for BSNL contacted the Council and requested for a copy of the same. However, the Advocates for BSNL were informed that the same will be provided on the date of hearing i.e. on 15th February, 2014. 3.17 According to BSNL, a copy of the Minutes of the Meeting held on 1st February 2014 were handed over to them at the Meeting held on 15th February 2014. Upon perusal of the said Minutes it was observed that certain incorrect statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il") in entertaining a reference under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as "the Act"), in disputes, which have arisen between the petitioners as a buyer of goods from Respondent No.2 M/s. Vidarbha Ceramics Pvt. Ltd, as seller. 3. Respondent No.2 M/s. Vidarbha Ceramics Pvt. Ltd. (hereinafter referred to as "the Supplier") has supplied certain goods to the petitioners (hereinafter referred to as "the Buyers") under a contract for supply of Fire Clay Refractory CokeOven. According to the Petitioners, the materials supplied by the supplier were defective and the supplier was, therefore, asked to replace the material. The supplier, apparently, admitted the defects in the material vide communications dated 01.01.2007, 25.01.2007 and 10.02.2007. The supplier, thereafter, issued a notice to the petitioners and invoked clause 22 of the agreement between them and proposed to appoint Justice C. P. Sen (Retired) as Arbitrator to settle the dispute through arbitration. However, in pursuance to clause 23 of the general conditions of contract, the Petitioners exercised, its powers and appointed one Mr. S. K. Gulati as an Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 18 notwithstanding anything contained in any other law for the time being in force. Section 18(3) of the Act in terms provides that where conciliation before the Council is not successful, the Council may itself take the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution and that the provisions of the Arbitration and Conciliation Act, 1996 shall thus apply to the disputes as an arbitration in pursuance of arbitration agreement referred to in Section 7(1) of the Arbitration and Conciliation Act, 1996. This procedure for arbitration and conciliation is precisely the procedure under which all arbitration agreements are dealt with. We, thus find that it cannot be said that because Section 18 provides for a forum of arbitration an independent arbitration agreement entered into between the parties will cease to have effect. There is no question of an independent arbitration agreement ceasing to have any effect because the overriding clause only overrides things inconsistent therewith and there is no inconsistency between an arbitration conducted by the Council under Section 18 and arbitration conducted under an individual claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before respondent no.1-Council on 25.10 .2010." 5. The Learned Advocate appearing for BSNL has submitted that though a Special Leave Petition (SLP) is preferred from the above decision of the Division Bench of this Court and the same has been admitted, there is no stay operating against the said order and therefore the ratio laid down in the said decision holds the field. 6. The learned Advocate appearing for BSNL also relied on the following Judgments passed by the learned Single Judge of this Court in: (i) Hindustan Sires Ltd. vs. R. Suresh Order dated 4th April 2013 in Arbitration Petition No. 56 of 2013, (ii) Faridabad Metal Udyog Pvt Ltd. vs. Mr. Anurag Deepak 2013 (7) Bom CR 631 and (iii) Supreme Cylinders Ltd. vs. R. Suresh Judgment dated 30th April 2013, passed i Arbitration Petition No. 52 of 2013 and has submitted that the learned Single Judge has in his said Judgments followed the decision of the Division Bench in Steel Authority of India Ltd. (supra) and has accordingly decided the arbitration petitions filed under Section 14 of the Act. 7. The Learned Advocate appearing for BSNL has next submitted that the claims raised by PIPL also pertain to the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Letters Patent Appeal No. 1997 of 2011; (iv) Union of India vs.Delhi High Court Bar Association and others (2002) 4 SCC 275 (v) Maharashtra State Electricity Board vs. Maharashtra Conductors Association (SSI) Bombay High Court order dated 30th August 2004 in Arbitration Petition (O.S.) No. 328 of 2004; (vi) Maharashtra Conductor Association (SSI) vs. Maharashtra State Electricity Board 2008 (4) AIR Bom. R. 236 (vii) M/s. Sanket Steel Industries vs. The Presiding Officer, Micro and Small Enterprises Facilitation Council and Ors. Bombay High Court (Nagpur) Judgment dated 7th January, 2014 in WP No. 3414 of 2012. (viii) Purbanchal Cables & Conductors Pvt. Ltd. vs.Assam State Elec. Board & Anr. (2012) 7 SCC 462 (ix) Secur Industries Ltd. vs. Godrej & Boyce Mfg.Co. Ltd. & Anr. (2004) 3 SCC 447 (x) Lalitkumar v.Sanghavi (Dead through LRS Neeta Lalit Kumar Sanghavi and another. vs. Dharamdas V.Sanghavi and ors. (2014) 7 SCC 255 (xi) Kirloskar Brothers Ltd. vs. M/s. Fusion Controls Unreported order of Bombay High Court dated 6th August, 2014 in Arb. Petition (A.S.) No. 48 of 2013 (xii) M/s. Modern Industries vs. M/s. Steel Authority of India Ltd. & Ors. 2010 (3) ALL MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Section shall be decided within a period of ninety days from the date of making such a reference " From the above Section it is clear that upon receipt of a reference by the Council, the Council may either itself attempt to bring about conciliation between the Parties in the matter, or seek the assistance of an institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre for conducting conciliation under the provisions of Sections 65 to 81 of the Act, and where the conciliation initiated under subsection (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration, and the provisions of the Arbitration and Conciliation Act, 1996 shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection (1) of Section 7 of the Act. 13. The Council upon receipt of the said Application dated 28th May 2012 from PIPL, by its letter dated 11th July 2012 informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the arbitration proceedings should be placed before the Arbitrator appointed by them. The meeting was adjourned to 18th January 2014 since the Chairman of the Council wanted to examine and study the case law on the subject. 16. On 18th January 2014, the Council recorded that the representative of BSNL raised the issue of jurisdiction qua the Council and submitted a copy of the Judgment passed by this Court in the case of M/s. Faridabad Meta Udyog Pvt. Ltd. vs. Mr. Anurag Deepak, Sole Arbitrator. This Judgment was obviously cited by BSNL in support of its submission that the Council has no jurisdiction to proceed with the Arbitration and not in support of the argument that the Council had no jurisdiction to hold the conciliation proceedings. The Council decided to hear the matter on 1st February 2014. From the Minutes of the Meeting held on 1st February 2014 (Page 120 of the Petition) it appears that arguments were once again advanced by the Advocates for the Parties with regard to the jurisdiction of the Council to proceed with the Arbitration, and the Council accepted the argument advanced by the Advocate for PIPL and came to the conclusion that the conciliation proceedings ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under subsection (2),any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal. 16. Competence of arbitral tribunal to rule on its jurisdiction. (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose. (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) a plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under subclause (5) of Section 16 of the Act, and BSNL if aggrieved may challenge the final award as provided in subclause (6) of Section 16 of the Act. The Judgment of the Division Bench of this Court in M/s. Steel Authority of India Ltd. and another vs. Micro, Small Enterprises Facilitation Council, through Joint Director of Industries, Nagpur Region, Nagpur (supra) holding that in the facts of that case the Council did not have the jurisdiction to proceed with the arbitration is a decision given in a Writ Petition filed by M/s. Steel Authority of India challenging the jurisdiction of the Council. A similar relief cannot be sought by BSNL by way of a Petition filed under Sections 14 and 15 of the Act. 20. The argument advanced on behalf of BSNL that the learned Single Judge has in Hindustan Sires Ltd. vs. R. Suresh, Sole Arbitrator, Faridabad Metal Udyog Pvt Ltd. vs. Mr. Anurag Deepak (supra) and Supreme Cylinders Ltd. vs. R. Suresh (supra) followed the view of the Division Bench of this Court in a petition under Section 14 of the Act also renders no assistance to BSNL. In that case the petition under Section 14 of the Act was filed by the supplier contending that the mandate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that this amounts not only to disobedience but also disregard towards the Council which is a statutory body. In support of this contention, the learned Advocate appearing for PIPL has relied on the decisions in the case of (i) Heema Ravishankar vs. K.R. Ravishankar 2004 Cri. L.J. 1205 and (ii) M.Y. Shareef & Anr. vs. Hon'ble Judges of the Nagpur High Court and others AIR 1955 SC 19. 23. BSNL has in response submitted that there is no contempt whatsoever committed by the Officers of the BSNL or the Advocate for BSNL as alleged. It is submitted that the said letter merely uses the language/terms used under Section 62(3) of the Arbitration and Conciliation Act, 1996. It is submitted that the caselaw relied upon by PIPL in support of its contention that the Officers of the BSNL and its Advocate have committed contempt would not be applicable to the facts of the present case. 24. After considering the submissions advanced by the Learned Advocates appearing for the Parties, I am of the view that there is no contempt committed by the Officers of the BSNL and/or the Advocate for BSNL as alleged by PIPL. Section 62(3) of the Act of 1996 reads as under: "62. Commencement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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